` Janet Yellen ‘ is expecting to stick to further cutting back economic stimulus at her first Monetary Policy Meeting ‘

#AceFinanceNews New Federal Reserve chief Janet Yellen is expected to stick to the game plan when she chairs her first monetary policy meeting this week, further cutting back economic stimulus.

But, six weeks after inheriting Ben Bernanke’s mantle, she is also under the gun to make a pivot in the way the Fed has been signalling its intentions.

Handled well, that delicate shift in how the Fed foreshadows an eventual rate hike could assuage markets. But communicated badly, it could result in volatile movements and leave the new Fed chief on the back foot.

The first meeting under Yellen’s lead of the Federal Open Market Committee, on Tuesday and Wednesday, is expected to conclude that unusually harsh winter storms were mainly behind the slowdown in economic activity in December to February.

#ANS2014

#afn2014, #ben-bernanke, #federalreserve, #janet-yellen, #monetary-policy

Mario Draghi-Call Me Bond Junk Bond

Printer Mario Draghi

Printer Mario Draghi (Photo credit: Ondrej Kloucek)

The Before Thursday:

After Ben Bernanke took the stage in Jackson Hole last week to rather defensively suggest the Fed will act soon, Thursday is Mario Draghi’s turn.

Before we get into the details of what the ECB could announce, a quick update on the European debt crisis: It’s still there. Yields for Spanish and Portuguese debt are at or above the 7% danger zone, and Italy is publicly complaining that their debt costs have little basis,Jens Weidmann, Germany’s top central banker, meanwhile, is reportedly both isolated and threatening to quit over his opposition to the ECB buying debt of struggling EU countries.

In a closed-door meeting in Brussels yesterday, Mario Draghi told the European Parliament that he’d be comfortable buying EU members’ bonds with maturities of three years or so. This, Draghi reportedly said, wouldn’t violate EU treaties. (Bill Gross tweeted that this bond-buying program would be something like writing “2-3 year checks”).

Of course, ECB bond-buying has been the summer’s worst-kept secret. As the WSJ’s Matt Phillips noted, Draghi said this on July 25: “To the extent that the size of these sovereign premia (in Spain and Italy) hamper the functioning of the monetary policy transmission channel, they come within our mandate”.

Draghi’s hints mean that three years into the European debt crisis, the ECB may finally return to limited, direct financing of struggling governments. Analysts, however, are all over the map about what the ECB may actually announce after its meeting on Thursday, and whether it will involve yield caps.

One safe bet: more political entanglement. Even though Draghi insists the ECB is not political, his actions are still very much wrapped into discussions on what he recently called “the sharing of powers and of accountability”. Or, as Nomura put it: “Just imagine if the Fed had to play tough with California or worse Texas for example, to effectively impart monetary policy”.

The Economist‘s Charlemagne blog has a great description of Draghi’s predicament: He simply can’t fix Europe without the help of the continent’s leaders:

The After Thursday:

So finally after all the wheeling and dealing Mario Draghi got his own way and opened Pandora’s box and now we wait! This is the fact that the ECB the “lender of last resort” has finally supported ” buying up debt” and letting it be sold as ” junk to the highest bidder.” We can all con ourselves this is for the good of the euro zone but really we know it is for the good markets and nobody else!The real winners short-term are the gamblers of our food,oil and lives!

The control of the masses by the few is how we should see it and the sheer fact that our lives are controlled by a simple but very effective piece of paper called simply a “share.” Well now we own a share of ” gambling debt” a little like an IOU that will never be repaid! So instead of having ” junk bonds” we now have junk funds, capitalise by gambling debt!

And as we all know when you are in debt one day you have to repay pay it or eventually declare bankruptcy!

#ben-bernanke, #draghi, #ecb, #european-central-bank, #italy, #jackson-hole, #jens-weidmann, #mario-draghi

Fiscal Regeneration As Economy Slows

Federal Open Market Committee

Federal Open Market Committee (Photo credit: DonkeyHotey)

Members of the Federal Reserve’s policy-setting committee pared back their expectations for short-term U.S. economic growth as a result of tepid consumer spending and employment growth, Federal Open Market Committee minutes reveal. The FOMC warned that a potential intensification of the European debt crisis and the looming fiscal cliff also present ‘significant downside risks’ to the outlook. As such, the FOMC considered new policy options, including a large-scale asset purchase program and the extension of the Fed’s low-rate pledge to jump-start the economy.

#ben-bernanke, #economic, #economic-growth, #european-sovereign-debt-crisis, #federal-open-market-committee, #federal-reserve-system, #fomc, #unemployment

The Differences Between Inflation and Unemployment

Unemployment

Unemployment (Photo credit: Dekonstruct2009)

This was an extract l came across the other day courtesy of Reuters and tries to explain how they initiate the various scenarios that exist! In how to control inflation, interest rates and unemployment. Also as these are the main protagonists that act in various ways to prevent the growth, that so many countries want!

Firstly before l continue l would like you to read this extract, then l will explain simply why these 3 factors cannot be controlled! 

Copied and pasted as it was written:        

Ben Bernanke and the rest of the FOMC faced similarly stark costs and benefits this week when they weighed additional monetary easing: in Ryan Advent’s words, it’s a choice between “a trillion-dollar output gap and 6 million unnecessarily unemployed workers,” versus “having 4% inflation for a year rather than 2%”. For Tyler Cowen, who in his own words is “more agnostic about the gains from monetary expansion than are many of its advocates,” the choice was easy: The Fed clearly should pursue a more expansionary monetary policy because “the costs of inflation, within reasonable ranges, are not very high”. Ultimately, the Fed announced this afternoon that although inflation has declined and unemployment hasn’t, there would be no new easing.

So let us look at these 3 areas in the way they impact on the life blood of any country. I call them the life blood as so often many governments forget that without this life blood,the heart of any country would stop pumping and producing growth. Well that is exactly what has happened and try as they may they cannot ” kick-start growth” well kicking anyone to buy or consume will not work! As anyone knows when you beat any animal with a big stick it becomes used of being beaten, well it works the same with kicking a person or an economy! Though sooner or later they will kick-back and will take themselves away from the situation and as we know the bull market will become a bear! As this is the only way the market can bear the ups and downs wrought upon it!

So let us start with ” interest rates” and the fact that we need to keep it low! Why? so that our economy will not grow too quickly or explode! It is simpler to control borrowing and lend to more people already in sinking in debt! This of course leads us to the fact that if we do not lend we cannot provide growth. Then without growth no kick-start to the economy, hence no growth!

Next we need to look at ” inflation” and how it cannot be allowed to become uncontrollable and so we cannot spend too much on public services and thus we have to maintain a balance! The problem is all types of inflationary measures have failed in the past and when we start to grow and people borrow too much debt we fuel inflation and eventually,we have another crash.

Lastly and to me most important is the life blood of our economy and that is unemployment or maybe its proper title employment. I use the word ” proper” in other posts quite often, as in ” prosperity” as this is true wealth built on firm foundations and provides an eternal balance.

So to put into ” prospective” we have to ” provide” employment to our life blood with a “secure” and safe environment and an income sufficient to look after themselves and their family.

What we have is a vicious circle of inflation and unemployment fueled by interest rates, borrowing and debt!

Is it not time for a change? Add your comments ,like and share!

Thank you Ian [Editor]

#ben-bernanke, #costs-of-inflation, #economic-growth, #economy, #expansionary-monetary-policy, #federal-open-market-committee, #federal-reserve-system, #inflation, #monetary-expansion, #output-gap, #reuters, #tyler-cowen, #unemployment